In one of his first major moves, new Federal Reserve Chair Wash is quickly assembling a core advisory team, promoting two long-serving internal economists to advisor roles to provide policy and analytical support for his promised institutional reforms. Daniel Covitz, Deputy Director of the Division of Research and Statistics, and Eric Engstrom, Senior Associate Director of the Division of Monetary Affairs, will serve as advisors to Wash. Both are long-time Fed employees with deep institutional knowledge, as Wash has pledged a systematic reshaping of the institution.
These appointments are among the first concrete steps taken since Wash assumed the chairmanship last month. Wash has also brought in two conservative policy veterans from outside the Fed system and a former White House speechwriter to further build out his team.
Last week, Wash announced the formation of five specialized task forces to re-examine the Fed's communication methods, data analysis approaches, and portfolio management. These groups will be composed of outside experts and supported by internal Fed professionals in relevant fields.
Internal Promotions Follow Precedent
These appointments are not without precedent. Wash's predecessors also typically selected one or two senior advisors from the existing staff in their early tenure.
Covitz has been with the Fed for nearly three decades, with research spanning financial stability and credit markets. He has a long-standing connection with Wash, having been cited as a contributor in several of Wash's speeches during his previous term as a Fed Governor from 2006 to 2011.
Engstrom focuses on monetary policy and financial market analysis. A model he developed last year indicated that the probability of a "soft landing"—where inflation falls near the 2% target while economic growth remains robust—had decreased significantly by mid-2025. Partly due to tariff uncertainties, the risk of "mild stagflation" has correspondingly increased.
Joint Research: Supply Shocks and Fiscal Deficits Push Up Rates
In February of this year, Covitz and Engstrom co-authored a research paper exploring why U.S. long-term Treasury yields continued to rise even as the Fed was lowering its benchmark short-term rate. They argue that the rise in long-term rates stems primarily from investors demanding higher risk compensation to guard against potential adverse supply shocks—economic disturbances that push up prices and hinder growth—as well as expanding federal fiscal deficits.
Their research also found no evidence that markets have lost confidence in the Fed's ability to maintain inflation near its 2% target.
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